PERFORMANCE APPRAISAL SYSTEM

WITH SPECIAL REFERENCE TO

HEAVY ENGINEERING CORPORATION’S Ltd.
RANCHI

A PROJECT REPORT

Submitted by

ANJANA HORO

In partial fulfillment for the award of the degree

Of

POST GRADUATE DIPLOMA

In

PERSONNEL MANAGEMENT

XAVIER INSTITUTE OF SOCIAL SERVICE, RANCHI

MAY 2009

1
 APPROVAL SHEET

This is to certify that this project dissertation entitled “Performance Appraisal

System” has been prepared by Anjana Horo in partial fulfillment of Post Graduate

Diploma in Personnel Management at Xavier Institute of Social Service, Ranchi.

This embodies the data collected and analyzed by the candidate under the guidance

of Prof. Kr. Mohit Spring, Personnel Management, XISS, Ranchi and hereby

approved as indicating the proficiency of the candidate.

Research Guide Director, XISS

External Examiner HOD

(Dept. of Personnel Management)

2
 ACKNOWLEDGEMENT

This project is an outcome of the support, encouragement and precious guidance

provided by our research guide, Professor Kr. Mohit Spring.

I am also very thankful to Mr. Venugopal, Director, Personnel, HEC Ltd Ranchi,
for allowing me to undertake this project in the organization and extending all
necessary help and guidance.

This project is also an outcome of the colossal support and help provided by a
number of people at Heavy Engineering Corporation Limited. On the outset I
would like to thank Mr. N. Jha (headquarters), Mr. H. K. Gupta (HMBP), Mr. D.
Dubey (FFP), Mr. Krishna (HMTP), for their co-operation and guidance.

It is not possible to list all those who gave their time so graciously, but I owe a
special debt of gratitude to a number of people, and I thank them herewith for their
kind and considerable assistance.

Anjana Horo

3
 ABSTRACT
An organization’s goal can be achieved only when people put in their best efforts.

To ascertain whether an employee has shown his or her best performance on a

given job, the organization has its own tools and techniques such as its

Performance Appraisal System. It is a powerful tool to calibrate, refine and reward

the performance of the employee. It helps to analyze his achievements and

evaluate his contribution towards the achievements of the overall organizational

goals.

By focusing the attention on performance, performance appraisal goes to the heart

of personnel management and reflects the management’s interest in the progress of

the employees. But, how to ascertain whether the Performance Appraisal System

prevailing in the organization is effective and appropriate for the performance

appraisals of the employees or not? So, the project is an attempt to analyze the

effectiveness of the Performance Appraisal System what would be a better idea

than finding out the effectiveness of the Performance Appraisal System through

the employees’ views itself? So, the objective of the survey is to measure the

effectiveness of the prevailing Performance Appraisal system of the organization

4
by considering the views of the employee itself who are the main participants in

the appraisal system.

LIST OF TABLES

SL. NO. DISCRIPTION PAGE NO.

1. Multiple Purpose of Performance Assessment 14

2. Process of Performance Appraisal 19

3. Criteria Based on Scores for the Standard of the Organization 31

5
 LIST OF FIGURES
SL. PAGE
DESCRIPTION
No NO
Is performance Appraisal System of the organization capable of assessing all the
1. activities performed by employees? 32

Is Performance Appraisal System an Opportunity for employees to know what

2. management expects from them? 33

Responses for the fairness of the Performance Appraisal system.

3. 34
Response for whether managers are given adequate training in doing the
4. appraisals. 35

Does the appraisal system ensures proper checks and balances to control
5. dishonest or vindicate bosses? 36

Responses for whether Key Result Areas for managers are decided by their
6. immediate supervisors or not. 37

Responses for the statement No-7.

7. 38
Responses for the statement No-8.
8. 39

Responses for the statement No-9.

9. 40

Responses for the statement No-10.

10. 41
Respondents’ views about whether the performance Appraisal system covers
11. workers also or not. 42

12. Responses for the Statement no-12. 43

6
 Response for the Statement No-13.
13. 44

Does the Performance Appraisal system has the scope for assessment of job-
14. related competencies as well as personality dimensions? 45

Is Self-appraisal a part of the Performance Appraisal system or not.

15. 46

SL. DESCRIPTION PAGE

NO. NO.
Respondents’ views regarding the Statement No. 16.
16. 47

17. Responses for the Statement No.17. 48

PA system of the organization is linked to career development.
18. 49

The PA system of the organization assesses employee’s potential for performing

19. higher level jobs. 50

Training needs are identified by our PA system.

20. 51

Professional input in the development of PA system.

21. 52

Use of 360 Degree Appraisal System in the organization.

22. 53
Absence of employees’ grievances against PA system.
23. 54

Review and modification of PA system.

24. 55
Freedom of managers to discuss about PA system and provide suggestions.
25. 56

7
 TABLE OF CONTENTS

CHAPTER NO. TITLE PAGE NO.

1. PERFORMANCE APPRAISAL 9

1.1Introduction 10
1.2 What is Performance Appraisal?
11
1.3 Objectives of Performance Appraisal 13
1.4 Limitations of Performance Appraisal 15
1.5 Types of Performance Appraisal 16
1.6 Process of Performance Appraisal 19
1.7 Objectives of the Survey 22
1.8 Research Methodology 23

2. HEAVY ENGINEERING CORPORATION LIMITED 25

4.1 Introduction to H.E.C. Ltd. 26
4.2 The Making of Dreams 26
4.3 Particulars of the Organization 27

3. DATA ANALYSIS 30

4. CONCLUSION & SUGGESTIONS 57

6.1 Result of the Survey 58

6.2 Suggestions from the Employees 59

8
 6.3 General Suggestions 60

5. BIBLIOGRAPHY 61

ANNEXURE:
The Questionnaire

CHAPTER 1

PERFORMANCE APPRAISAL

9
1.1 INTRODUCTION

An organization is a group of people who are trying to achieve a common goal. The common
goal is achieved by collective effort of all employees who work in any organization across
various locations. When a large number of people work together there should be a method to
assess their contribution for the organization. How to ascertain whether an employee has shown
his or her best performance on a given job? The answer is performance appraisal. Therefore,
organizations use performance appraisal systems for scientifically assessing the performance of
each employee and identifying their potential for development. A performance appraisal system
has the following stakeholders:
1. The organization
2. Employees
3. HRD department

From organizational point of view, a performance appraisal system has three objectives, namely,
performance appraisal, performance monitoring and development of a culture of high
performance. The HRD department is concerned with the development and implementation of
performance appraisal system in an organization. Employees are concerned with receiving
feedback about their contribution to the organization. They are directly involved in the
implementation of performance appraisal by receiving and giving feedback about performance.
Performance appraisal system is a powerful tool to calibrate, refine and reward the performance
of the employee. It helps to analyze his achievements and evaluate his contribution towards the
achievements of the overall organizational goals. By focusing the attention on performance,

10
performance appraisal goes to the heart of personnel management and reflects the management’s
interest in the progress of the employees.
The most significant reasons of using Performance appraisal are:
• Making payroll and compensation decisions – 80%
• Training and development needs – 71%
• Identifying the gaps in desired and actual performance and its cause – 76%
• Deciding future goals and course of action – 42%
• Promotions, demotions and transfers – 49%
• Other purposes – 6% ( job analysis, providing superior support, assistance and
counseling)
1.2 WHAT IS PERFORMANCE APPRAISAL

Come appraisal time and one of the most debated aspects of completing the fair-and square
appraisal revolves around what is 'measured' and what is 'achieved'. And the fable of the Bees
and the Bee Keepers is a very popular paradigm that often gets quoted at such times. It goes
thus:
The Story: Once upon a time there were two beekeepers that each had a beehive. The
beekeepers worked for a company called Bees, Inc. The customers’ demand for the product was
increasing. So Bees, Inc. assigned each beekeeper a goal for increased honey production. The
beekeepers had different strategies to meet their goals and to improve the performance of their
hives. The first beekeeper established a bee performance management approach that measured
the number of flowers each bee visited. At considerable cost to the beekeeper, an extensive
measurement system was created to count the flowers each bee visited and each bee was given
feedback at mid-season on his individual performance and created special awards for the bees
who visited the most number of flowers. However, the bees were never told about the hive's goal
to produce more honey so that the company could increase honey sales. The second beekeeper
also established a bee performance management approach but this approach communicated to
each bee the goal of the hive for increased honey production. The beekeeper and his bees
measured two aspects of their performance, the amount of nectar each bee brought back to the
hive and the amount of honey the hive produced. The performance of each bee and the hive's
overall performance were charted and posted on the hive's bulletin board for all the bees to see.

11
The beekeeper created a few awards for the bees that gathered the most nectar. But he also
established a hive incentive program that rewarded each bee in the hive based on the hive's
overall honey production the more honey produced, the more recognition each bee would
receive. At the end of the season, the beekeepers evaluated their approaches. The first
beekeeper’s hive had increased the number of flowers visited, but the amount of honey produced
by the hive had dropped. The Queen Bee reported that since the bees were busy trying to visit
more number of flowers, they limited the amount of nectar they would carry so they could fly
faster. Also, since only the top performers would be recognized, the bees felt they were
competing against each other for awards. As a result, they would not share valuable information
with each other that could have helped improve the performance of all the bees (like the location
of the flower filled fields). As the beekeeper gave the awards to individual bees, unhappy
buzzing was heard in the background. After all these, one of the high performing bees told the
beekeeper that if he had known that the real goal was to make more honey, he would have
worked totally differently. The second beekeeper, however, had very different results. Because
each bee in his hive was focused on the hive's goal of producing more honey. These Bees had
aimed at gathering more nectar in order to produce more honey than ever before. The bees
worked together to determine the highest nectar yielding flowers and to create quicker processes
for depositing the nectar they had gathered. They worked together to help increase the amount of
nectar gathered by the poorer performers. Tile Queen Bee of this hive reported that the poor
performers either improved their performance or transferred to hive No.1, because the hive had
reached its goal. The beekeeper rewarded each bee his portion of the hive incentive. The keeper
was also surprised to hear a loud, happy buzz and a jubilant flapping of wings as he rewarded the
individual high performing bees with special recognition.

12
1.3 OBJECTIVES OF PERFORMANCE APPRAISAL

Data relating to performance assessment of employees are recorded, stored and used for several
purposes.
The main purposes of employee assessment are:

1. To effect promotions based on competence and performance.

2. To confirm the services of probationary employees upon their completing the probationary
period satisfactorily.

3. To assess the training and development needs of employees.

4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not
been fixed.

5. To let the employees know where they stand insofar as their performance is concerned and to
assist them with constructive criticism and guidance for the purpose of their development. To
judge the gap between the actual and the desired performance.

13
6. To improve communication. Performance appraisal provides a format for dialogue between
the superior and the subordinate, and improves understanding of personal goals and concerns.
This can also have the effect of increasing the trust between the rater and the ratee. Bridge the
communication gap between employee and administrator. Helps to strengthen the relationship
and communication between superior – subordinates and management – employees.

7. To reduce the grievances of the employees.

8. Finally, performance appraisal can be used to determine whether HR programmes such a

selection, training, and transfers have been effective or not. Broadly, performance appraisal
serves four objectives-

i. Developmental uses,
ii. Administrative uses/decisions,
iii. Organizational maintenance/objectives, and
iv. Documentation purposes

Multiple purposes of the performance assessment can be illustrated as in the table-1 given below.

Multiple Purposes of Performance Assessment

General Applications
Developmental Uses
Administrative Uses/Decisions
Organizational Maintenance/ Objectives HR planning
Specific Purpose
Identification of individual needs
Performance feedback
Determining transfers and job assignments
Identification of individual strengths ad
development needs
Salary
Promotion
Retention or termination
Recognition of individual performance
Lay-offs
Identification of poor performers
Determining organization training needs
Evaluation of organizational goal

14
 achievement
Information for goal identification
Evaluation of HR systems
Reinforcement of organizational
development needs
Documentation Criteria for validation research
Documentation for HR decisions
Helping to meet legal requirements

Table 1: Multiple Purpose of Performance Assessment

1.4 LIMITATIONS OF PERFORMANCE APPRAISAL SYSTEM

The problem with subjective measure is the rating which is not verifiable by others and has the
opportunity for bias. The rate biases include: (a) halo effect (b) the error of central tendency, (c)
the leniency and strictness biases (d) personal prejudice, and (e) the recent performance effect

(a) Halo Effect: It is the tendency of the raters to depend excessively on the rating of one trait or
behavioral consideration in rating all others traits or behavioral considerations. One way of
minimizing the halo effect is appraising all the employees by one trait before going to rate on the
basis of another trait.
(b) The error of Central Tendency: Some raters follow play safe policy in rating by rating all
the employees around the middle point of the rating scale and they avoid rating the people at
both the extremes of the scale. They follow play safe policy because of answerability to
management or lack of knowledge about the job and person he is rating or least interest in his
job.

15
(c) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to
be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any
purpose. Equally damaging one is assigning consistently low rates.

(d) Personal Prejudice: If the rater dislikes any employee or any group, he may rate them at the
lower end, which may distort the rating purpose and affect the career of these employees.

(e) The Recent performance Effect: The raters generally remember the recent actions, of the
employee at the time of rating and rate on the basis of these recent actions favorable or
unfavorable than on the whole activities.

Other factors that are considered as problems are

• Failure of the superiors in conducting performance appraisal and post performance

appraisal interview.
• Less reliability and validity of the performance appraisal techniques.
• Negative ratings affect interpersonal relations and industrial relations system.
• Influence of external environmental factors and uncontrollable internal factors.
• Feedback and post appraisal interview may have a setback on production.
• Management emphasizes on punishment rather than development of an employee in
performance appraisal.
• Some ratings particularly about the potential appraisal are purely based on guess work.
• Relationship between appraisal rates and performances after promotions was not
significant.
• Superiors lack that tact of offering the suggestions constructively to subordinates.
• Supervisors were often confused due to too many objectives of performance appraisal

1.5 TYPES OF PERFORMANCE APPRAISALS

There are a number of methods of performance appraisal. No single method can be considered
ideal in all circumstances. The methods of performance appraisal can be broadly classified into
two categories: traditional and modern methods.

Traditional methods are the relatively older methods of performance appraisal. These methods

16
are based on studying the personal qualities of the employees. These may include knowledge,
initiative, loyalty, leadership and judgment.

The Traditional Methods:

Unstructured method: In this method, the appraisal process does not follow any specific
structure. It is based on the description of the employee by the superior. The unstructured nature
of this method makes this extremely subjective.

Straight ranking method: In this method, the superior is asked to rate all the employees doing a
specific job from best to the poorest based on a specific criterion. While it is easy to select the
best and the worst employee, selection of employees who are mediocre is difficult. This model
also suffers from subjectivity.

Paired comparison method: The paired comparison method involves comparing each employee
with every other employee in the group. Based on the comparison a ranking system is developed.
This ranking system is considered more reliable as it is based on a systematic method of
comparison and evaluation.

Man-to-man analysis: In this method, the performance of the employee is based on certain
factors that are selected. The factors can include initiative, leadership etc. A scale is developed
for each factor and each individual is evaluated according to the scale. However, there is
considerable difficulty in developing a scale.

Grading method: In this method, the performance of the employee are determined in advance
and defined as categories. The categories can be Grade ’A’ for an outstanding performance,
Grade ‘B’ for an excellent performance, ‘C’ can be for average and ‘D’ for poor etc.

Checklist method: In this method a checklist consisting of objective statement is prepared such
as:-

17
1. Is the worker regular at work?
2. Does the employee command respect among his subordinates?
3. Is the employee helpful to his peers?

Questions such as these are used in rating. The superior has to say ‘yes’ or ‘no’ to each question.
The difficulty in this method lies in constructing such a checklist.

Free essay methods: This method involves writing an essay by the superior on the employees’
performance. It is an open ended process and suffers from subjectivity. Some bosses may not be
good in essay writing and may not be serious in their essays. Comparing two individuals on the
basis of the essays on them is also not easy.

Critical incidents method: This method uses critical incidents such as accidents, major lapses on
the part of the employee to rate his performance.

Field review method: In this method a Human resources specialist conducts the appraisal by
asking a series of questions about the employee to the superior. After the session is over the
specialist makes notes based on his interaction with his superiors. These notes are approved by
the specialist and are placed in the employee’s file.

Confidential report: This method involves preparation of a confidential report by the superior on
the employee’s performance. The disadvantage of this method is the obvious subjectivity and
secrecy which results in low credibility of this method.

The Modern Methods:

Modern methods were devised to improve upon the traditional methods. Modern methods
attempt to remove the shortcomings of the old methods such as subjectivity, bias etc. Some of
the modern methods are:

BARS (Behaviorally anchored rating scales): In this system scales are devised based on aspects
of the employees’ behavior. The superior is asked to rate the performance of the employees on
the basis of these scales.

18
MBO: MBO stands for management by objectives. MBO appraisals are based on predetermined
objectives which are decided and agreed upon by the superior and the employee. It is a process
of goal setting and feedback. This process introduces greater objectivity in the evaluation
process. The employee is aware of what is expected of him and is able to focus attention towards
the goals.

Psychological appraisals: These appraisals involve assessment of the intellectual abilities,

emotional stability, reason and analytical skills, sociability etc. These methods can be useful
when taking decisions about placement of employees, development and training.

360 degree feedback:

This method enables the employee to receive feedback from his superior, his peers and his
subordinates. This feedback provides information about the skills and behavior of an individual.
The information is based on assessment from different angles and is more objective.

1.6 PROCESS OF PERFORMANCE APPRAISAL

19
Table 2: Process of Performance Appraisal.

1. ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees.
This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the organizational
goals and objectives. The standards set should be clear, easily understandable and in
measurable terms. In case the performance of the employee cannot be measured, great
care should be taken to describe the standards.

20
 2. COMMUNICATING THE STANDARDS
Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be informed and the standards should be
clearly explained to them. This will help them to understand their roles and to know what
exactly is expected from them. The standards should also be communicated to the appraisers or
the evaluators and if required, the standards can also be modified at this stage itself according to
the relevant feedback from the employees or the evaluators.

3. MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the
specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
appropriate techniques of measurement, taking care that personal bias does not affect
the outcome of the process and providing assistance rather than interfering in an
employees work.

4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

The actual performance is compared with the desired or the standard performance.
The comparison tells the deviations in the performance of the employees from the
standards set. The result can show the actual performance being more than the
desired performance or, the actual performance being less than the desired
performance depicting a negative deviation in the organizational performance. It
includes recalling, evaluating and analysis of data related to the employees’
performance.

5. DISCUSSING RESULTS

21
 The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on communication and listening. The
results, the problems and the possible solutions are discussed with the aim of problem
solving and reaching consensus. The feedback should be given with a positive
attitude as this can have an effect on the employees’ future performance. The purpose
of the meeting should be to solve the problems faced and motivate the employees to
perform better.

6. DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve
the performance of the employees, take the required corrective actions, or the related
HR decisions like rewards, promotions, demotions, transfers etc.

22
1.7 OBJECTIVES OF THE SURVEY

Since the focus of the performance appraisal is measuring and improving the actual performance

of the employee and also the future potential of the employee it is very important for the

appraisal System to be fair and efficient and well organized.

Performance Appraisal System achieves its objective when it is fully capable of assessing the

performance of the employees fairly and efficiently and fulfills all its purposes. Since H.E.C is

leaving no stone unturned to regain its state of prosperity, the performance of the employees

matters a lot at this stage, and it is the Appraisal System that plays an important role in managing

the performance of the employees. It is a powerful tool to calibrate, refine and reward the

performance of the employee. It helps to analyze his achievements and evaluate his contribution

towards the achievements of the overall organizational goals. So, it is very important to take care

of the efficiency of the Appraisal System so that it can achieve its objective.

If the standard of the appraisal system is high it will efficiently assess the performance of the

employees. So, the basic objective of the study is to find out the standard of the Performance

Appraisal System prevailing in the organization.

23
1.8 RESEARCH METHODOLOGY

“Research inculcates scientific and inductive thinking and it promotes the development of logical
habits in any organization.”The research study is conducted in order to know the employee’s
awareness and perception level regarding the prevailing Performance Management System.
STUDY DESIGN: Descriptive research design.

SAMPLING PLAN:

Sample Size = 80 Employees, which is twenty percent of the population.

Setting (Sample Area) = Heavy Engineering Corporation Limited, Ranchi.

Duration of study = Two (2) Months.

SAMPLING TECHNIQUES: The sampling technique adopted is Stratified random

sampling.

SAMPLE SELECTION: Inclusion Criteria- only managerial level employee and Directly
Recruited Officers will be included.
Exclusion level- workers in the plants and employees in non managerial level will be excluded.
DATA COLLECTION PROCEDURE:
On the basis of the following two types, the research will be carried out:-
1. Primary Data
2. Secondary Data

1. Primary Data:-

24
 a) Questionnaire Method: The main instrument for the collection of primary data is the
Questionnaire Method. The questionnaires are prepared for Directly Recruited Officers
(DROs) which will mainly contain questions on the following dimensions:-
• Measures of performance
• Feedback
• Employees’ attitude towards performance appraisal system prevailing in H.E.C.
Ltd.
b) Informal discussion: Informal discussions are carried out with DROs across various
levels in the organization to know the prevailing system, awareness level and also to
know their viewpoints or suggestions on the Performance Appraisal System.

2. Secondary Data:-
Secondary data is collected by reviewing different literatures like books, articles, magazines,
journals, etc and also through different websites.

DATA ANALYSIS PROCEDURE:

Analysis will be illustrated through:-
• Bar graphs,
• Histograms

25
CHARTER 2
HEAVY ENGINEERING CORPORATION
LIMITED

26
2.1 INTRODUCTION TO H.E.C. Ltd.
Heavy Engineering Corporation Ltd. (HEC),Ranchi was incorporated in December, 1958 with
the primary objective of achieving self sufficiency and self-reliance in the field of design and
manufacture of equipment and machinery for the Iron and Steel Industry and other core sector
industries like, Mining, Metallurgy etc.
Core strength of H.E.C. Ltd. can be expressed as: One-stop-shop for:
• Mining Equipments
• Steel Plant Equipments
• EM Equipment
• Railway Products
• Defense Products

2.2 THE MAKING OF DREAM

In 1955, during a state visit to USSR, Jawaharlal Nehru, the first Prime Minister of India,
toured the Ural Engineering Works in Sverdlovsk. The Prime Minister was very impressed
and called it a “Plant of Plants”. He said that his newly free country badly needed such
plants, thereby stressing the special role of heavy engineering works which can provide
equipments for all the basic industries and add to the country’s economic development.
The then Soviet Union, the world leader in this field at that time and had the most advanced
processes for the production of lead, zinc and copper, was ready to assist India. They readily
delivered the equipments India needed and also sent specialists to train Indian Personnel.

27
Thus the construction of the plant at Ranchi started in 1961 and completed in 1968. The
design was produced by GIPROTYAZHMASH, the leading state design institute of the
USSR. Soviet engineering and other industries supplied 27000 tons of the latest engineering
equipments and 18000 tons of steel structural elements and other necessary materials for the
plant at Ranchi. As preplanned, Soviet products accounted for 97 per cent of the industrial
installed at the Heavy Machine Building Plant, one of the manufacturing units of Heavy
Engineering Corporation Limited at Ranchi.

To ensure the efficiency in the operations in the plants, the Soviet Union assisted in training
of Indian engineers, technicians and skilled workers. Czechoslovakia assisted in the
construction of a Foundry and Forge plant and also a Heavy Machine Tool Plant at Ranchi.
These plants along with the Heavy Machine Building Plant became a part of the Heavy
Engineering Corporation, forming a big engineering complex which made a major
contribution to the development of India’s heavy industries.

Thus the basis of heavy industry was laid with the establishment of Heavy Engineering
Corporation plant producing machines to produce machines.

2.3 PARTICULARS OF THE ORGANIZATION

HEC Ltd. a Public Sector Undertaking, under Ministry of Heavy Industry, Government of
India, was incorporated on 31.12.1958 under the Companies Act, 1956. The company
started production in the year 1964. It was visualized at that time that one steel plant of one
million ton capacity will be added every year in India, which however, did not materialize.
Consequently the demand for steel making machinery was never as high as it was expected.
Hence HEC diversified its area of operation in other core sectors like mining, railways,
defence etc. Currently, the company is engaged in the manufacture and supply of capital
equipment, machine tools and spares needed for the core sector industries namely; steel,
coal, cement, power, defence, aluminum, ship building and railways etc.

28
➢ VISION

To be a major Heavy Engineering Company in India providing quality products and

services to the Steel, Mining, Coal, Railways and other Strategic Sectors.

➢ MISSION
• To acquire and maintain leading position as suppliers of quality equipment, spares,
systems & services for the Steel, Mining, Coal, Railways and other Strategic
Sectors.
• To make the Revival Plan sustainable
• To expand business into allied areas and other priority sectors of the economy.

➢ OBJECTIVES

1. GROWTH
To attain substantial jump in production and bring about sustained growth to attain
production level of Rs.3000 crores by 2011-12.
2. PROFITABILITY
To provide reasonable & adequate return on capital employed, primarily through
improvement in operational efficiency, capacity utilization & productivity, in order to
generate adequate internal resources to finance the company’s growth.
3. HUMAN RESOURCE PLANNING & DEVELOPMENT
To enable each employee to achieve his optimum potential, improve his capabilities,
perceive his role and responsibilities and participate in and contribute to the growth
and success of the company. To continuously invest in human resources and be alive
to their needs, hopes and aspirations.
4. CUSTOMER SATISFACTION
To build a high degree of customer confidence by providing increased value for his
money through improved product quality, delivery, performance and customer
service.

29
 5. MODERNISATION
To upgrade and modernize plants and equipment with the aim of increasing
availability of machines/equipment and removing bottlenecks.
6. TECHNOLOGY
To achieve technological excellence in operation by development of indigenous
technology and efficient absorption and adaptation of imported technologies to suit
business needs and priorities with a view to providing a competitive advantage to the
company.

➢ THE HEAD OFFICE AND THREE PLANTS OF THE COMPANY:

Situated in Ranchi, the capital of the newly formed state Jharkhand.

➢ OFFICES OF THE COMPANY: In New Delhi and Kolkata.

➢ THE CAPITAL BASE OF THE COMPANY:

The authorized capital of the company is Rs. 500 crores and the paid up capital is
Rs.453.24 crores.

➢ EXISTING PLANT FACILITIES, PRODUCTS AND PAST COLLABORATIONS:

• More than 7000 acres of land had been conveyed to the company at the time of its
incorporation by Govt. of Bihar for its use. The company has built plants,
administrative office and township on this land.
• The company was set up with the capability to manufacture steel plant equipment
that can enhance the steel producing capacity by one million tons per annum. The
company has three manufacturing units and one project and consultancy division viz.
(i) Foundry Forge Plant (FFP)
• Set up in Collaboration with erstwhile CSSR (M/s SKODA)
• Manufactures Heavy Castings & Forgings
• Rolls for Hot & Cold Rolling Mills for Steel Plants

(ii) Heavy Machine Building Plant (HMBP)

• Set up in Collaboration with erstwhile USSR

30
 • Design & Manufactures Equipment and Spares for different Sectors.

(iii) Heavy Machine Tool Plant (HMTP)

• Set up in Collaboration with erstwhile CSSR (M/s SKODA)
• Design & Manufactures CNC & Conventional machine tools in Medium &
Heavier ranges.
• Manufactures Special purpose Railway Machine Tools.
• Takes up RECONDITIONING of old machine tools.

(iv) Project Division (TKP)

• Execution from Concept to Commissioning.

CHAPTER 3

DATA ANALYSIS

31
3.1 DATA ANALYSIS

For the responses against each statement in the part-I of the questionnaire there is a point
allotted as per rating:
VERY TRUE -4
MOSTLY TRUE -3
PARTLY TRUE -2
NOT AT ALL TRUE - 1

Since the sample size is 80, therefore,

The highest score for each statement can be calculated as: - 80*4=320

Since in part-I of each questionnaire there are 25 statements therefore,

Total score will be: - 320*25=8000

Therefore, we can find out where the organization stands on the basis of the
following criteria: -

SCORES REMARKS

32
 The Performance Appraisal System of
1) 76%-100%
your organization is of very high standard.

The Performance Appraisal System of

2) 50%-75% your organization is just mediocre in terms
of standard.
The Performance Appraisal System of
3) 25%- 49% your organization is ad hoc and primitive
in terms of standard.
Table 3: Criteria based on scores for the standard of the Organization

STATEMENT No. 1- The Performance Appraisal (PA) system of our organization is capable of
assessing all the activities performed by employees.
The response received for this statement is displayed by the chart. Out of 80 respondents 27 of
them think that the PA system of the organization is capable of assessing all the activities
performed by them. 29 of the respondents think it is mostly true and 23 of the responses are for
partly true and 1 of the employee thinks that it is not at all true.

Figure 1.Is performance Appraisal System of the organization capable of assessing all the activities
performed by employees?

So, according to the figure-1. We can calculate the score as:

27*4 = 108
29*3 = 87
23*2 = 46
01*1 = 01
TOTAL = 242

Where 4,3,2,1, are the points for the responses and 27,29,23,01, are the number of responses to
the statement. Therefore for this statement score is 242 out of 320.

33
STATEMENT No. 2- The PA system provides an opportunity for each appraisee to know
what the management really expects from him. Responses for this statement can be very
clearly depicted from the chart shown in Figure-2. Out of 80 respondents 5 respondents
disagreed on the statement, 21 of them partly agreed on the statement and, 25 of them think it is
mostly true and 29 of the respondents think it is very true that the PA system allows the
employees to have the knowledge of what the management wants them to do.

Figure 2: Is Performance Appraisal System an Opportunity for employees to know what

management expects from them?

Thus the calibrated score for this statement is 238 out of 320. Maximum of the respondents
think that it is mostly true that the PA system of the organization gives an opportunity to the
employees to know what the management expects from them. It is very important for an
employee to know what management actually expects from them in performance, for this the
management should provide regular feedback regarding their performance as to where they are
lacking and in which area they are performing well. The employees should also be aware of the
organizational goal so that they can direct their endeavor and persistent efforts towards the
organizational goal.

STATEMENT No.3- The PA system is quite fair and objective.

Performance Appraisal system must be fair in order to measure the performance of the
employees effectively. Through the survey report it was found that the PA system in the

34
organization is fair and objective for 27 of the respondents out of 80, which is only 33.75% of
the sample size. Whereas 7 of the respondents think that the Performance Appraisal system is not
at all fair and objective, which means 8.75% of 80 respondents have this view regarding the
appraisal system. 24 of the respondents think it is mostly true and 22 of the respondents think it
is partly true. The responses for the given statement can be seen in figure-3 given below.

Figure 3: Responses for the fairness of the Performance Appraisal system.

Even though 8.75% of the respondents voted against this statement the calibrated score for the
responses for this statement is 253 or 79.06%, which shows that the Performance Appraisal
system is quite fair and objective. But the organization should also take care of that 8.75% of the
respondents to make the performance Appraisal system perfect and efficient.

STATEMENT No. 4- Managers are given adequate training in doing the appraisals.

It is very important that the superiors who are doing appraisals must be adequately trained in
order to judge the employees’ performance. According to the responses obtained by the
respondents as shown in figure-4, it is seen that out of 80 respondents, 21 thinks that it is very
true that the managers are given adequate training in doing their appraisals.29 of the respondents
which forms the majority think that it is mostly true that the managers are adequately trained for
this purpose. There are 23 respondents out of 80 who think that this statement is partly true,
which means that they are not satisfied about the efficiency by which managers handle their
appraisals. 7 respondents out of 80 think that managers are not given adequate training for doing
their appraisals.

Figure 4: Response for whether managers are given adequate training in doing the appraisals.

35
Therefore according to the responses as shown in figure-4 the calibrated score for this statement
is 224 out of 320. Which means the score is 70%, this shows that managers scored quite well for
this statement.

STATEMENT No.5- The PA system ensures proper checks and balances to control
dishonest prejudices or vindicate bosses (if any).
As seen in the figure-5 majority of the respondents, i.e. 28 or 35% of the respondents think that
the above statement is partly true. 8 respondents or 10% of the respondents think that has a
negative view regarding this statement as they voted for ‘Not at All True’ response. 23.75% or
19 of the respondents think that the statement is very true whereas 31.25% or 25 of the
respondents think that the given statement is mostly true.

Figure 5: Does the appraisal system ensures proper checks and balances to control dishonest or
vindicate bosses?

Therefore after calibrating the score for the given statement the score are 215 out of 320, i.e.,
67.19%. This shows that the organization needs to improve in this so as to gain the confidence
of the employees in this matter, and this will also motivate employees to perform even better.

36
STATEMENT No.6- KRA (Key Result Areas) for managers is decided by his immediate
superior in consultation with the manager at the beginning of the year.
Figure-6 displays the responses of the employees for this statement. Most of the respondents
i.e., 32 out of 80 respondents think it is mostly true that KRAs for managers are decided by their
immediate superiors in consultations with the managers at the beginning of the year. 31.25% or
25 of the employees think that the statement is very true. 23.75% or 19 of the employees out of
80 think that the above statement is partly true whereas 5% or 4 out of 80 employees believe that
the above statement is not at all true.

Figure 6: Responses for whether Key Result Areas for managers are decided by their immediate
supervisors or not.

Thus, based on the responses for this statement the score achieved is 238 out of 320 which
comes to 74.37%. The organization seems to follow effective measures in order to set KRSs and
KPAs for the employees according to the score achieved by the responses. The organization
conducts formal discussions held individually/ (functional) group-wise/ shop-wise/ section-wise
to set the KPAs and dates of completion of the respective targets etc. before arriving at KPAs/
KRAs. The target setting should certainly be done through a process of mutual consultations and
discussions. This itself may become an educative process in terms of understanding each other.
Consultation with the employee is very important as it makes tasks and targets clear to the
employees and it also helps to take into consideration employees’ difficulties and capabilities.

37
STATEMENT No.7-Appraisals for managers are done against certain key Result Areas
(KRAs).
As displayed in figure-7, majority of the respondents i.e., 33 out of 80 thinks it is very true that
the appraisals for managers are done against certain Key Result Areas. 24 of them thinks that the
given statement is mostly true and 23 out of 80 respondents think that the given statement is
partly true.

Figure 7: Responses for the statement No-7.

The above statement, on the basis of responses scored 250 out of 320, which is 78.12%.
The organization seems good in setting KRAs and in doing the appraisals based on it. The
targets set should deal with the tasks expected to be accomplished by appraise under each
KPA /KRA during the period that will be reviewed later. Such target setting helps the appraise to
be clear of the expectations and also provides an opportunity for him to ask for the assistance
required from his boss in order to accomplish whatever was set for him. Appraisal is done
against certain targets which are measurable; these measurable targets leave no room for
discrepancies in measuring the actual performance of the employees.

STATEMENT No.8- Periodic feedback regarding performance is given to almost all

employees in our organization.
The figure given below shows the responses of the employees for this statement.

38
 Figure 8: Responses for the statement No-8.

According to the survey, it was found that 12.5% or 10 out of 80 employees think that it is very
true that periodic feedback regarding performance is given to almost all the employees in the
organization. It seems that a very small number of the respondents think that the statement is
very true, while most of the respondents have the opinion that the given statement is mostly true,
the number of respondents voting for this response came out to be 25 out of 80, which is 31.25%
and 24 respondents or 30% of the respondents have the opinion that the given statement is partly
true. 21 out of 80 respondents or say 26.25% of the respondents have the opinion that the given
statement is not at all true and this shows that large number of respondents believe that periodic
feedback regarding performance is not given to almost all employees in the organization.
Thus the above statement on the basis of the responses scored 184 out of 320, which is equal to
57.5%. This is below average score, giving an idea that the organization lacks in this process of
giving a feedback to their employees regarding their performance. The organization should take
care of this as poor communication keeps employee in dark about what is expected from them. It
is the responsibility of the superiors to communicate the feedback to their subordinates regarding
their performance. Conveying the feedback in constructive way is also important and should be
taken care of as very few superiors have the skill to constructively convey to an employee how
to improve his/her performance. By this feedback process the appraiser should know more and
more about the circumstances under which his appraise is working, the difficulties he is
experiencing and the contribution he is making. The appraisee should also understand by the
feedback given that how he himself is responsible for some achievements and non-achievements.
Thus giving a feedback improves the performance of the employees.

STATEMENT No.9- The objectives of our PA system are clearly known to all our
employees.
For this statement 25% or 20 out of 80 employees responded that it is very true whereas 26 or
32.5% of the sample size responded that the given statement is mostly true. There are 25 or
31.25% of the respondents who hold the view that the given statement is partly true while 9 out
of 80 respondents believe that the statement is not at all true. The figure-9 given below shows the
chart of the respondents and their responses for this statement.
39
 Figure 9: Responses for the statement No-9.

The score obtained by the responses for this statement is 217 out of 320 which comes out to be
67.8%. Concluding from the score of the statement we can say that the employees are aware of
the objective of the performance appraisal system to a good extent but still there are number of
employees who are not very clear of the motives of the Performance Appraisal system. If the
employees know the motives and the importance of the Performance Appraisal system, they will
support it and show willingness in taking part in it sincerely. This in turn will result in the
achievement of the objective of the Performance Appraisal system.

STATEMENT No.10-Our PA system helps managers to systematically plan their work and
achieve the target

.
Figure 10: Responses for the statement No-10.

From the figure-10, we can conclude that most of the employees believe that the given statement
is partly true, as majority of the respondents, i.e., 27 or 33.75% out of 80 respondents voted the
statement as partly true. 2 or 2.5% out of 80 respondents believe that this statement is not at all
true, whereas 25out of 80 respondents and 24 out of 80 respondents responded for this statement
as very true and mostly true respectively.
The overall score for this statement is 228 out of 320 which came out to be 71.25%.

40
STATEMENT No.11- Our PA system covers workers also.

Figure 11: respondents’ views about whether the performance Appraisal system covers
workers also or not.

From the figure above it can be clearly understood that most of the respondents voted against the
given statement, 24 out of 80 respondents voted that this statement is not at all true whereas 22
of the respondents responded that the statement is very true and 11 of them feels that it is mostly
true. 23 of the respondents think it is partly true.
Thus the statement scored 191 out of 320 or 59.68%, thus in order to raise the standards of the
organization’s performance the organization should take care of the performance of each and
every employee, whether he/she is in managerial position or in a worker’s grade. The
performance appraisal is important in every level according to the suitable methods.

STATEMENT No.12-PA system of our organization is open and appraisal ratings are
communicated to employee

41
 Figure 12: Responses for the Statement no-12.

Figure-12 represents the responses of the 80 respondents. 8 out of 80 respondents responded that
the statement is ‘very true’. 20 of them believe that the statement is ‘mostly true’. There are 22
of the respondents who believe that the statement is ‘partly true’ and maximum i.e., 30 of the
respondents says that the given statement is ‘not at all true’. Here maximum respondents i.e.,
believe that the given statement is ‘not at all true’ and the least number of the respondents are in
favor that the statement is ‘very true’.
Thus the score for this statement came out to be 166 out of 320 i.e., 51.87%.
The score shows that the organization did not fare well in this part as most of the employees
believe that the Performance Appraisal system of the organization is not open and appraisal
ratings are not communicated to the employee. The organization should take care that the
employees are given feedback after their appraisal ratings are done, as the employee must be
aware of his strengths and weaknesses. Awareness of strengths and weaknesses helps the
individual to continue to retain his strengths and also make efforts to develop in weak areas so
that he becomes effective. This also motivates the employees.

STATEMENT No.13- Our PA system is not a method to control, humiliate or harass

employees.

Figure 13: Response for the Statement No-13.

Figure-13 represents the responses of the employees for the given statement. It is seen that 33
employee out of 80 are in favor of this statement as they believe that the statement is ‘very true’.
There are 28 or 35% out of 80 respondents believe that the statement is ‘mostly true’ and 17 or
21.25% believe that the statement is ‘partly true’. There are only 2 employees i.e., only 2.5% of
42
the respondents are against the statement as they responded that the given statement is ‘not at all
true’.
Thus the score for this statement comes out to be 252 out of 320 which 78.75%. This shows that
the organization takes care of their employees to a much great extent in avoiding the use of PA
system as a method of humiliation or harassing their employees. The organization views the
Performance Appraisal system as a format for dialogue between the superior and the
subordinate, which improves understanding of personal goals and concerns. This further helps to
strengthen the relationship and communication between superior – subordinates and
management – employees.

STATEMENT No.14-Our PA system has scope for assessment of job-related competencies

as well as personality dimensions.

Figure 14: Does the Performance Appraisal system has the scope for assessment of job-
related competencies as well as personality dimensions?

Figure-14 shows the responses of 80 employees for the above statement. 25 of the respondents
says that the statement is ‘very true’ and 33 out of 80 respondents feel that the statement is
‘mostly true’ whereas 18 of the believe that it is ‘partly true’. 4 respondents out of 80 voted
against the statement as according to them the given statement is ‘not at all true’.
Thus the score for this statement is 239 out of 320 which comes out to be 74.68%.This shows
that the organization is quite capable in assessing the job-related competencies as well as
personality dimensions of their employees through Performance Appraisal system.

43
STATEMENT No. 15- Self-appraisal is a part of our PA system.

Figure 15: Is Self-appraisal a part of the Performance Appraisal system or not.

Figure-15 displays the responses of the 80 respondents for the given statement. There are 33
respondents out of 80 who think that the given statement is ‘very true’. 25 of them responded
that the statement is ‘mostly true’. Out of 80 respondents 20 believes that the statement is ‘partly
true’ whereas none of the respondents are against the given statement.
Thus the score for the statement based on the responses is 255 out of 320 i.e., 79.68%. Certainly
Self-appraisal is not meant to be a ritualistic form filling exercise. It is a significant initial step
for performance development. A lot should happen in self-appraisal which may not be reflected
in forms filled by the appaisee. In fact a good self appraisal need not result in good form filling
although it results in increased self awareness through a process of review and reflection on the
part of the appraise. Self-appraisal should be a continuous process. More than his reporting
officer, the employee should take steps to continuously assess his own performance, identify his
strengths and weaknesses and continuously keep a record of efforts made as well as his own
success and failure experiences while performing different functions. He should also analyze the
causes for his successes and failures and prepare his development plans.

STATEMENT No.16-Appraisal interviews are conducted to discuss self appraisal with

superior's appraisal so as to decide the final rating.

Figure 16: Respondents’ views regarding the Statement No. 16.

44
The responses for the above statement are shown in the figure-16, where it is seen that only 6 out
of 80 respondents i.e., 7.5% think that the given statement is ‘very true’. 22 of them think that
the statement is ‘mostly true’ and other 22 of the respondents think that the statement is ‘partly
true’. There are 30 out of 80 respondents, i.e., 37.5% responded that the given statement is ‘not
at all true’ the least number of respondents were in favor of this statement.
Thus the score for this statement is 164 out of 320 which comes out to be 51.25%, this shows
that the appraisal interviews are not conducted to a good extent to discuss self appraisal with
superior’s appraisal so as to decide the final rating. For a perfect appraisal the superiors should
not just be confined to the appraisal forms only. It may happen several times that the forms fail
to give the clear picture of the employee’s performance. Even appraisers normally do not get
time to observe each of their subordinates closely or even conduct an appraisal- interview. Most
often the appraisers tend to form impressions about their subordinates on the basis of one or two
of their failure which may be striking to the appraisers. Sometimes one or two success
experiences may also leave highly positive marks. So it is necessary for an appraiser to judge
their subordinates not just by their appraisal forms or just by some striking failure of success
incidents, instead the appraisers should also conduct appraisal interviews in order to get a much
clearer picture about the employees and their performance.

STATEMENT No.17-Our PA system is linked to rewards such as annual increments.

Figure 17: Responses for the Statement No.17.

Figure-17 shows the responses for the given statement, here 7 respondents out of 80 responded
that the statement is ‘very true’ whereas 36 out of 80 believe that the statement is ‘not at all true’.
There are 19 out of 80 respondents who think that the statement is ‘mostly true’ and 18 out of 80
respondents think that the statement is ‘partly true’.
Thus the score for this statement comes out to be 157 out of 320 which is equal to 49.06%.
According to the score we can judge that most of the employees think that the PA system is not

45
linked to rewards such as annual increments and only few, i.e., 8.75% of the respondents
supported the statement.

STATEMENT No.18-The PA system of our organization is also linked to career

development.

Figure 18: PA system of the organization is linked to career development.

The responses for the given statement are represented in figure-18. There are 25 respondents
(31.25%) who think that the statement is ‘very true’. 27 out of 80 i.e., 33.75% believe that the
given statement is ‘mostly true’. 25 out of 80 respondents i.e., 31.25% of the respondents
responded that the given statement is ‘partly true’. Only 3 respondents out of 80 responded
against the statement that it is ‘not at all true’,
Thus the statement scored 234 out of 320, which is equal to 73.12%. So, according to the score
we can conclude that the PA system of the organization is linked to career development to a very
great extent.

46
STATEMENT No.19-Our PA system assesses our employee's potential for performing
higher level jobs.

Figure 19: The PA system of the organization assesses employee’s potential for performing
higher level jobs.

The figure-19 shows the responses for the given statement by 80 respondents.
25 respondents (31.25%) voted for the statement. Another 25 respondents think that the
statement is ‘mostly true’. Most of the respondents, i.e., 29 of the respondents think that the
statement is ‘partly true’, whereas only 3 respondents (i.e., 3.75%) have the view that the given
statement is ‘not at all true’.
Thus the score for the statement is 236 out of 320 which is equal to 73.75%. So, according to the
score it is clear that the organization’s PA system is good at assessing their employee’s potential
for performing higher level jobs.

STATEMENT No.20-Training needs are identified by our PA system.

47
 Figure 20: Training needs are identified by our PA system.

The figure-20 shows the bar chart representing the various responses by 80 respondents for the
given statement.27 respondents (33.75) of the respondents hold the view that the given statement
is ‘very true’. Other 27 respondents think that the statement is ‘mostly true’. Again there are 27
respondents according to whom the given statement is ‘partly true’ and only 1 out of 80
respondents hold the view that the statement is ‘not at all true’.
So, based on the responses the score for this statement is 244 out of 320 which comes out to be
76.25%. By seeing the score we can judge that the organization’s Performance Appraisal system
is capable enough to identify training needs.

STATEMENT No. 21- Professional input has gone into the development of our PA system.

Figure 21: Professional input in the development of PA system.

48
The figure- 21 displays the responses given by 80 respondents. From the bar chart in figure-21
we can see that 21 respondents (i.e., 26.25%) are having the view that the statement is ‘very
true’. 26 of the respondents have the view that the given statement is ‘mostly true’. There are 31
responses for the statement to be ‘partly true’ whereas only
2 out of 80 (i.e., 2.5%) respondents hold the view that the given statement is ‘not at all true’.
The score for this statement is 226 out 0f 320 which comes out to be 70.62%. So based on the
above score for the statement we can safely say that the organization has taken care of
professional inputs for the development of the Performance Appraisal system.

STATEMENT No.22- 360 Degree appraisal system is used in our organization to assess
strengths and weaknesses of managers.

Figure 22: Use of 360 Degree Appraisal System in the organization.

The figure-22 represents the responses of 80 respondents for the given statement whether 360
Degree appraisal system is used in the organization to assess the strengths and weaknesses of the
managers. Maximum responses were against the statement. 45 out of 80 respondents (57.25%)
were having the view that the statement is ‘not at all true’. 23 of the respondents (i.e., 28.75%)
think that the statement is ‘partly true’. 11 respondents hold the view that the statement is
‘mostly true’. There is only 1 respondent who thinks that the statement is ‘very true’.

49
Thus the score for the statement is 128 out of 320 (i.e., 40%). Based on the score we can say that
the organization does not use 360 Degree appraisal system to a good extent or we can say that
the organization does not use 360 Degree appraisal system to assess the strengths and
weaknesses of managers.

STATEMENT No.23-Employees do not have any major grievances against the existing PA
system.

Figure 23: Absence of employees’ grievances against PA system.

Figure -23 shows the chart regarding the responses of 80 respondents for the statement number
-23. There are 22 (i.e., 27.5%) of the respondents who believe that the given statement is ‘very
true’. 30 (i.e., 37.5%) of the respondents think that the statement is ‘mostly true’ and 25 (i.e.,) of
the respondents think that the statement is ‘partly true’. Very few that is only 3 respondents feel
that the statement is ‘not at all true’.
Thus the score for the statement is 231 out of 320, which comes out to be 72.18%. thus
according to the score of the statement we can conclude that most of the employees do not have
any major grievances against the existing PA system but still there are few of them who have
grievances regarding the present appraisal system of the organization.

50
STATEMENT No.24-Our PA system is reviewed and modified every 2-3 years.

Figure 24: Review and modification of PA system.

In the figure-24, we can see the graph representing the responses of 80 respondents regarding the
statement number 24. There are 13 (i.e., 16.25%) of the respondents who thinks that the given
statement is ‘very true’. 18 or 22.5% of the respondents think that given statement is ‘mostly
true’. 30 of the respondents think that the given statement is ‘partly true’ whereas according to
the 19 (i.e., 23.75%) of the respondents the given statement is ‘not at all true’.
Thus the given statement scores 185 out of 320, which is equal to 57.81%. so according to the
scores it seems that most of the employees think that the PA system of the organization is not
reviewed and modified every 2-3 years, and so the organization must take care of regularly
reviewing of the PA system.

STATEMENT No.25-Managers are free to discuss the PA system and give suggestions to
modify it.

51
 Figure 25: Freedom of managers to discuss about PA system and provide suggestions.

The responses for the statement number-25 are shown in figure-25. According to the chart
shown in the figure, 4 respondents out of 80 have the view that the given statement is ‘very true’.
21 of them have the view that the statement is ‘mostly true’. 31 out of the 80 respondents believe
that the given statement is ‘partly true’. There are 25 respondents who hold the view that the
given statement is ‘not at all true’.
Thus the score for this statement is 166 out of 320, which is equal to 51.87%. Such a low score
for the statement shows that according to most of the employees, managers are not free to
discuss the PA system and give suggestions to modify it.

52
CHAPTER 4

CONCLUSIONS AND SUGGESTIONS

4.1 RESULT OF THE SURVEY

Thus adding up all the scores of the 25 statements given, we get a total score of 5363 out of
8000. This comes out to be 67.03%. Thus on the basis of remarks for the scores as given in
table-1, the remark for this organization will be that the performance appraisal system of the
organization is just mediocre in terms of standard. So the organization needs to take some
effective steps in order to improve the standard of the performance appraisal system in the
organization.

53
 In order to improve the standard of the performance appraisal system of the organization, it is
very important to hear the complaints and suggestions of the employees regarding the prevailing
appraisal system. When asked from the employees whether they would like the current appraisal
procedure to be reviewed, then in response to this statement majority of the respondents agreed
to change the current appraisal system and the weightage for this response was 56%. There were
34% of the respondents according to whom the current appraisal system should not be reviewed
and 10% of the respondents who could not say whether the appraisal system should be reviewed
or not.
The organization should also take care whether their performance appraisal system leads to
identify he hidden potential of the employees. Majority of the respondents, i.e., 59% of the
respondents agreed that their performance appraisal system leads to identification of the hidden
potentials of the employees whereas 41% do not agree to this statement.
There are almost 45% of the respondents out of 80 who are not satisfied with the prevailing
performance appraisal system where as only 55% of the respondents said that they are satisfied
with the performance appraisal system prevailing in their organization.

4.2 SUGGESTIONS FROM THE EMPLOYEES

1. Performance appraisal system should be such that it could assess the different traits of
an individual quantitatively. It should be a continuous process throughout the year.
After assessment, individual should be communicated properly about the strengths and
weaknesses of the employee.

54
 2. Individual traits and training and development reports must be looked into precisely
and to be implemented accordingly.

3. Transparency is the utmost requirement in the Performance Appraisal system.

4. Performance Appraisal should be in the simplest form as employees usually do not

understand every terminology of the same and express reluctance to adopt it.

5. Every employee should have a well defined KRAs depending upon the positions.

6. Proper and adequate instructions in filling the appraisal form should be given to the
employees and even managers should be given adequate training in doing the
appraisal.

7. To some extent Performance Appraisal system is good but there should be a periodic
feedback system, which does not exist at present and the feedback should be
constructive.

8. Concise, short and simplest way of Performance Appraisal system should be

implemented. This will save the time of both the management and the employees.

9. Targets are not independently achieved and hence individual potentials are not
reflected in the present appraisal system.

10. Targets should be set for each employee in quantifiable terms and achievement based
on actual performance should be recorded by a third agency that is competent enough
to understand the role of the employee in realistic terms.

4.3 GENERAL SUGGESTIONS

Since the Appraisal system is recently reviewed still some employees does not have a positive
response to this new Appraisal System. The Successful implementation of new appraisal system
also depends to a great degree on the Personnel and HRD department. The responsibility for
55
initiating and monitoring the implementation of new appraisal system is usually given to these
departments.

Effective implementation of these systems depends crucially on these departments as:

i. The managers of these departments should have a thorough understanding of the

new system and should have a high degree of commitment to it. They should
attempt to practice the new system even before they are used by the line
managers.
ii. They should anticipate employees’ resistance and be prepared to break this
resistance through persistent efforts.
iii. While the effectiveness with which these systems are implemented depends on
the line managers and may vary from managers to managers. Personnel and HRD
department can be instrumental in helping the managers in effective
implementation.
iv. To some extent the Performance Appraisal system is good but there should be a
periodic feedback system, which does not exist at present in the organization. The
aim of the Performance Appraisal system should not be only to rate an individual
as good, average or poor. The aim of the mapping should be to improve the
performance of individual to achieve organizational goal. This is possible only by
incorporating positive periodic feedback system.
v. Simplest way of performance appraisal should be implemented.
vi. After the implementation of new appraisal system the Personnel and HRD
departments are likely to be the target of critics during the transition period. The
managers of these departments should recognize this and should possess a great
degree of patience. At the same time, they should be open to suggestions and
should be willing to make changes when needed.

BIBLIOGRAPHY

1. T.V.Rao, (1999) “Appraisal and Developing Managerial Performance.”

56
 2. T V Rao, (2008) “Performance Management and Appraisal System: HR Tools for Global
Competitiveness.”

3. Dinesh K Shrivastava, (2005) “Strategies for Performance Management.”

4. Rao, V.S.P (2005), “Human Resource Management”, Performance and Potential

Appraisal.

5. WEBSITES REFERRED
• www.projectsparadise.com
• www.humanresource.about.com
• www.citehr.com
• www.performance-appraisal.com
• www.managementparadise.com
• www.manpowerindia.net
• http://appraisals.naukrihub.com/
• http://en.wikipedia.org/wiki/Performance_appraisal

ANNEXURE

QUESTIONNAIRE:

57
This is to certify that information collected through the question mentioned below would
only be used for research purpose and would not be disclosed to any third party.
Personal details:
Name:
Department:

Please indicate your response by putting a ( ) mark in the appropriate box.

Very true 4
Mostly true 3
Partly true 2
Not at all true 1

PART-I
NOT AT
VERY MOSTLY PARTLY
ALL
STATEMENTS TRUE TRUE TRUE
TRUE
4 3 2
1
1. The Performance Appraisal (PA)
system of our organization is capable
of assessing all the activities
performed by employees.
2. The PA system provides an
opportunity for each appraise to know
what the management really expects
from him.
3. The PA system is quite fair and
objective.
4. Managers are given adequate training
in doing the appraisal.
5. The PA system ensures proper checks
and balances to control dishonest
prejudices or vindicate bosses(if any)
6. Appraisals for managers are done
against certain Key Result Areas
(KRAs).
7. KRA for each manager is decided by
his immediate superior in consultation
with the manager at the beginning of
the year.

58
 NOT
VERY MOSTLY PARTLY
AT ALL
STATEMENTS TRUE TRUE TRUE
TRUE
4 3 2
1
8. Periodic feedback regarding performance
is given to almost all employees in our
organization.
9. The objectives of our PA system are
clearly known to all our employees.
10. Our PA system helps managers to
systematically plan their work and achieve
the targets.
11. Our PA system covers workers also.

12. PA system of our organization is open and

appraisal ratings are communicated to
employees.
13. Our PA system is not a method to
control, humiliate or harass employees.
14. Our PA system has scope for assessment
of job-related competencies as well as
personality dimensions.
15. Self-appraisal is a part of our PA system.

16. Appraisal interviews are conducted to

discuss self appraisal with superior’s
appraisal so as to decide the final rating.
17. Our PA system is linked to rewards such
as annual increments.
18. The PA system of our organization is also
linked to career development.
19. Our PA system assesses our employee’s
potential for performing higher level jobs.
20. Training needs are identified by our PA
system.
21. Professional input has gone into the
development of our PA system.
22. 360 Degree appraisal system is used in our
organization to assess strengths and
weaknesses of managers.
23. Employees do not have any major
grievances against the existing PA system.
24. Our PA system is reviewed and modified
every 2-3 years.
25. Managers are free to discuss the PA
system and given suggestions to modify it.

59
 PART-II

(i). If given a chance or an opportunity would you like that the current appraisal procedure
should be reviewed?
a) Yes b) No c) Can’t Say
(ii).What according to you should be the appropriate method for conducting performance
appraisal?

a) Rating the employee on number of traits along with the range of performance for each
by the supervisor.

b) For every trait, each subordinate is paired with and compared to every
other Subordinate.

c) Reviewing employees on the basis of identified specific examples of good or poor

performance.

d) Setting specific measurable goals with each employee and periodically reviewing the
progress made.

e) Reviewing performance through case studies, presentations, role playing, etc., for
future performance.

f) Receiving feedback from people whose views are considered helpful and relevant
including the appraise himself.

(iii). Does your Performance Appraisal System leads to identification of hidden potential of the
employees?
a) Yes b) No

SUGGESTIONS AND VIEWS:

………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
........................................................................................................................................................................
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………

60
………………………………………………………………………………………………………………

61